▶ Picture this: Your days of working at your job are about to come to a close. Even though you’ve had a great career, the time has come for you to retire and enjoy your golden years. This is the moment you’ve been waiting for your entire life, and now it’s all yours…
Except that you didn’t plan out your retirement correctly. Or at all.
When it comes to retirement planning, you can’t afford to wait to get started. There’s a ton of different nuances concerning how to plan for retirement, and if you don’t know what to expect you’ll be leaving your last job without any funds to keep you afloat.
The good news is that you’ve decided to take the time to get started on planning it all out, and this article is a great place to begin. You’ll learn all about the things you should and shouldn’t do to make sure your retirement is nothing less than a success. Read on to learn more!
Why Retirement Planning Is Important
Retirement can be one of the best times of your life. It can also be one of your worst nightmares if you fail to plan accordingly. Planning for retirement consists of a complex system of do’s and don’ts, and in many cases, the sooner you start working towards it, the better.
This is why it’s so important that you build up your portfolio as soon as possible. It’s been statistically proven that when you invest in your retirement future early on, you reach a greater height of success – and if you wait, the opposite is also true.
It’s always smart to ask the right questions, such as “will I have enough money?” and “who will look after my needs?” Here’s what you need to know in order to get started on your path to a successful (and comfy) retirement.
Start Setting Your Retirement Goals
Before you decide to do anything else, you’re going to want to set up your retirement goals. After all, how can you determine how much you need and what you need to do if you have no idea about the funds you should acquire?
There are many assets that you need to start planning for when you retire. Start by calculating the monthly spending that you expect to see down the road. What do you have left to pay for? Any annual fees that come to mind? Is there a little one you need to look after?
Next, you’ll want to decide which age you want to retire. The standard age of retirement is 65, but you can choose to retire after that age or even before it (though you may lose out on some of your funding) in some cases.
When you consider the age you want to retire, think about your life expectancy as well. How long on average does someone in your gender or background live?
Multiply the total number of months of your life expectancy by the amount you believe you’ll need each month to get an approximate value of what you’ll need to have saved for your retirement. Of course, there are always other factors, but this is a good start.
Start Building Your 401(K)
One of the quickest and easiest measures you can take is to start building up your 401(k). Practically everything about it is laid out for you, so it would be a terrible thing to pass up.
Most professional jobs offer employees a chance to build up their 401(k) wealth, so you’ve likely heard this term used before. Think of it being similar to your savings, except it’s specifically for retirement purposes.
The earlier you start to place funds into your account, the better – and thankfully, its very easy. You can just ask your boss to take out a percentage of your payment and deposit it into your 401(k) account, and you can set the transaction to auto-draft each month.
Making a move this simple is a great way to make sure you have some pocket change after you leave your place of work.
IRAs for the Win
Sometimes your employer doesn’t have the means to (or simply doesn’t want to) give you access to a retirement savings plan through their business. Not to worry; there’s a little thing called Individual Retirement Accounts that can save the day.
Individual Retirement Accounts, or IRAs, work in much the same way as 401(k)s, but without the need for an employer to set up the account. They’re also great for those who are self-employed or are simply looking for another way to save up for retirement.
There are several different types of IRA plans to choose from, but they all come with similar tax benefits and have their own wide range of investment options. Of course, there are also rules for when you can remove the funds you place, so read up before you choose your IRA plan.
We all have a social security account and a corresponding social security number, but most of us have no idea what that is. You’ll be happy to know that you can use your social security benefits to help you in achieving financial security in retirement.
If you work, there’s a good chance you’ve seen a portion of your paycheck removed to pay for certain taxes and medical funds. These funds go to the Federal Insurance Contributions Act (FICA) and are used to support current retirees.
When it’s your time to retire, those who are still working will help pay for your benefits. However, there are a few factors that come into play in concerns to how much you will receive.
The biggest factor would be the age that you retire, as the longer you wait the more benefits you will receive. Your benefits are also determined by how much you’ve paid into social security and how much you’ve earned during your time of employment.
Look Into Getting an Annuity
If you’re looking for a safe and effective way to build up your retirement funds, getting an annuity would be the best way to go. An annuity allows you to contribute your own funds to help supplement your retirement income.
With an annuity, you would pay an insurer a premium, or a lump sum, of money. The insurer will invest that money and allow it to grow through competitive interest rates over a set period of time. When you reach a certain age, you can recieve a fixed monthly amount for life depending on the terms of your annuity contract.
Don’t Forget the Children or Grandchildren
One thing we want to keep in mind is the fact that we need to plan for the future generation. After all, there’s a good chance you are supporting only yourself when you retire, and you need to make sure you keep those who you love in mind.
While you can use your funds to pay for the needs of your children or grandchildren, there are other ways you can help them without having to dig deep into your own pockets.
One of the best ways to do this is through a trust fund. In fact, the primary purpose of a trust fund is to transfer your assets to your children or grandchildren so they can be sure to have enough finances to cover themselves.
Trusts are great as…